FAQ: The basics of the Microsoft trial
After more than 18 months in and out of the courts, it may be getting a little tough to keep track of the Micosoft antitrust trial.
When did the case start?
The Justice Department (DOJ) and 20 states--one later dropped out--filed the case nearly two years ago,
on May 18, 1998. The trial commenced on Oct. 20, 1998 and ended Sept.
21, 1999, after 76 days of testimony.
What is the case about?
There are four basic claims in the government's case: that Microsoft
illegally maintained a monopoly in operating systems; that it leveraged that
monopoly into the
browser market and illegally tied Internet Explorer to Windows; that it
dictated "boot-up" restrictions to PC makers; and that the company entered
into prohibitive and exclusive agreements with Internet service providers.
Are some claims more important than others?
Under antitrust law, it is not necessarily illegal to be a monopoly. But
using that power in anti-competitive way, such as withholding essential
products or raising prices arbitrarily, can violate antitrust law. The
government strove to prove Microsoft used some of these tactics to preserve
its Windows franchise. Another argument--that Microsoft illegal tied, or
bundled, Internet Explorer with Windows--has been a highly contentious
issue.
Why is the tying claim so important?
It hits at the heart of Microsoft's business practices and its ability to
add new features to Windows. Microsoft argues it has a right to add features
at will,
while the government contends that the additions make it nearly impossible
for companies selling stand-alone products to compete. In turn, this hurts
consumers because a lack of competition keeps prices artificially high.
The judge issued another document, the findings of fact. How is that
different from this ruling?
Jackson issued the findings of fact on Nov. 5, giving the government and
Microsoft its first hint of things to come. The judge's findings are
essentially his distillation of what was true, based on plaintiff and
defendant
presentations. The findings of fact are similar to deliberations where a
jury figures out what is true before reaching its verdict. Jackson's ruling,
called the conclusions of law, is the application of law to the findings of
fact.
What was yesterday's ruling?
Jackson concluded that Microsoft violated antitrust laws by leveraging its
monopoly position in operating systems to capture the market for Web
browsers. Microsoft used anti-competitive means to do this, such as
combining Internet Explorer with Windows, violating two sections of the 1890
Sherman Act.
What happens now that the judge has ruled?
Jackson will next call for remedy hearings, where the DOJ, states and
Microsoft will recommend what should be done about the antitrust violations.
The government could ask for a "structural" remedy, which could mean
breaking up Microsoft, or a "conduct" remedy that would restrict its
business practices. Third parties, among them Microsoft competitors, could
pipe in with their own recommendations.
How long will remedy hearings take?
The hearings are likely to take place over three months--longer if Jackson
explores breaking up Microsoft. Afterward, he will issue his final ruling,
which will include remedies to Microsoft's antitrust violations.
Will Microsoft appeal Jackson's ruling?
Yes. Microsoft has said it will request an expedited appeal that could put
the case before the U.S. District Court of Appeals for the District of Columbia
by the end of the year. Jackson could also petition the Supreme Court to take the
case directly. If that happens, the appeal could be over in as little as a
year. Otherwise, it will take about 24 months.
The case has been about Windows. Will remedies affect other Microsoft
products?
Almost certainly. The government will be looking to restore competition in
other areas and in future markets. It could restrict how Microsoft sells
Office 2000, which has benefited from the operating system monopoly. Because
Microsoft dominates other software markets, the government could, for
example, ask Microsoft to develop Word 2000 for alternative operating
systems, such as Linux.
How could the ruling affect Microsoft's business?
In the short term, there will be no immediate impact on Microsoft or how it
conducts its business. The judge, however, could impose temporary
restrictions on Microsoft while the case is appealed. If not, there would be
no real effect until after the Supreme Court hears the case.
Will the ruling have any immediate impact on consumers?
No. Any final ruling by the court would be designed to restore competition
and spur innovation. Consumers might eventually have more choice of
products, but until now the government has not asked for monetary damages
for consumers. But related civil class-action suits could benefit some
consumers.
Are there many of these class-action lawsuits?
There are currently about 115 class-action suits pending against Microsoft,
most filed after Jackson issued his findings of fact. Once Jackson issues
his final ruling, some of these cases will be able to use the bulk of the
government's case to legitimize their claims. But the majority face an
uphill climb as only a handful of states, such as California, let third
parties sue in these kinds of lawsuits. Because most people buy Windows on
PCs and not directly from Microsoft, they cannot sue directly in most
states.
Which states are involved in the case?
California, Connecticut, Florida, Illinois, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Massachusetts, Missouri, Minnesota, North Carolina, New
Mexico, New York, Ohio, Utah, West Virginia, Wisconsin and the
District of Columbia.